Shareholders’ agreements

Shareholders’ agreement: Dutch law

If a BV has more than one shareholder, usually the agreements between the shareholders are recorded in a shareholders’ agreement. A shareholders’ agreement can include agreements that are contrary to the articles of association or legal regulations. Although the law contains several rules on the relationships between shareholders and – in case of BV’s – stipulations that have to be included in articles of association to restrict the transfer of shares, this does not mean that shareholders can draw up all types of arrangements to circumvent these legal regulations. The lawyers at law firm AMS in Amsterdam can help you to draw up a shareholders’ agreement or articles of association, customized to your needs, can advise you on the (in) validity of certain stipulations and assist you in a dispute (legal action) with other shareholders.

Drafting a shareholders’ agreements

A shareholders’ agreement is always customized. It is important for a Dutch lawyer to know what exactly the shareholders want to arrange on various matters, including:

The appointment of managing and supervising directors. Shareholders’ agreements often contain stipulations specifically stating which shareholders can appoint which managing and supervising directors.

Exercising voting rights. The shareholders’ agreement can stipulate that a shareholder has to exercise his voting right in a certain manner, or how to use this to implement a certain strategy. The agreement can also stipulate that in certain cases a shareholder has to transfer his voting right to another shareholder.

Sale of shares. If a majority shareholder receives an offer for 100% of the shares, is a minority shareholder then obliged to also sell his shares? For this purpose, a shareholders’ agreement often contains – different varieties of – a so-called drag-along arrangement. Such an arrangement entitles majority shareholders to impose on minority shareholders the obligation to go along with a sale of the company. A variation is the tag-along, which entitles minority shareholders to co-sell their shares when the majority shareholder sells his shares.

The price of shares in the sale. Shareholders’ agreements often include arrangements on the price to be paid for shares during certain periods or in certain situations. For example, stipulations can be included that if a managing director leaves the company for reasons for which he can be blamed (a so-called bad leaver) he has to transfer his shares against a nominal value. Also, agreements can be made in advance that during a certain period of time, a certain discount has to be applied to the value of the shares, or, on the other hand, how the value of the shares should be determined and with which valuation method.

Capital contribution. A shareholders’ agreement can include stipulations compelling the shareholders in certain situations – such as when the solvency or liquidity of the company falls under a certain value – to contribute additional capital. Should a shareholder fail to do so, he can be denied the right to take additional shares, effectively diluting his interest.

Shareholders’ agreements and legislation. Although the Supreme Court has yet to rule on this, several courts have already made clear rulings in this area: parties are free to make such agreements (the principle of contractual freedom). Therefore, once a shareholder has agreed to an agreement that deviates – possibly to his detriment – from legal rules and rules in the articles of association, that agreement shall nevertheless be valid.

Disputes about shareholders’ agreements. In disputes between shareholders, the stipulations in shareholders’ agreements are often essential. If a party to a shareholders’ agreement no longer complies with the arrangements in this agreement, often immediate action has to be taken. The Dutch lawyers at law firm AMS in Amsterdam, who specialize in shareholders’ agreements and articles of association, are willing to act for you as legal counsel in case of a dispute.

Articles of association: Dutch lawyer

The articles of association of a company in The Netherlands (usually a private limited company = a BV) include rules on the relationships between shareholders: how and when are decisions taken, which decisions require a supermajority of votes, etcetera. If the articles of association fail to regulate these matters, the Civil Code of The Netherlands (BW) provides general rules on the relationships between shareholders. Law firm AMS in Amsterdam has years of experience in assessing, drawing up and litigating in shareholders’ agreements. Our lawyers are highly involved with their client’s interests and offer a sharp and transparent fee structure. Should you require more information or should you have any question with respect to legal advice or litigation in The Netherlands, please feel free to contact one of the corporate lawyers our law firm.